Will Uniphar be Ireland’s only IPO this year as volatility returns?

Markets Beat: Larry Goodman makes €4m profit on Green Reit bet

Timing the stock market is mug's game, as Maurice Pratt might say.

The then C&C chief executive had to abandon a flotation of the cider maker in mid-2002 amid “unprecedented volatility” in markets at the time (before managing to get a deal away less than two years later).

So, the chairman of Uniphar for the past decade must now be hugely relieved that he and his chief executive, Ger Rabbette, got the drug distribution and healthcare services group's €135 million initial public offering (IPO) away on July 12th.

Had they held off for just two weeks, Pratt may well have found himself having to pull the plug on another IPO.

Dublin’s Iseq, which staged an impressive rally in the first 6½ months of the year, has slumped about 10 per cent since Uniphar’s stock started trading on July 17th – standing out as one of the weaker stock market indices globally.


Volatility has been driven by concerns over some of the world's largest economies as the US-China trade war continues, the growing prospect of a no-deal Brexit since Boris Johnson got hold of the keys to No 10 Downing Street, and the latest political crisis in Italy, the euro zone's most indebted country.

The Uniphar IPO actually involved a total of €150 million of shares being sold to new investors, but €15 million of these were held back for 30 days under a standard IPO practice, known as an over-allotment procedure.

In buoyant IPOs, where the share price takes off, the brokers behind a flotation would buy additional stock from the company to settle the delayed purchases.

Davy role

However, as equities tanked in recent weeks, one of the IPO brokers, Davy, which also had a job to help create a stable market for the stock in its early days, had to step in to support the share price. All told, it bought about 9.2 million Uniphar shares in Dublin and London over the 30 days. That’s almost 8 per cent of the stock originally sold.

Most of the buying was around the €1.15 IPO price, but Davy was also forced to buy batches of stock at €1.10 on August 6th as the shares hit a low of €1.08 in the market – 6 per cent off its IPO price.

Had Davy not been hovering up Uniphar shares over the past four weeks, the picture would surely have been uglier.

Davy has used the stock it purchased on the open market to settle €10.6 million of the €15 million of additional stock placed at the time of the IPO. It only needed to buy €4.4 million of new shares from Uniphar to complete.

That, of course, means that the final amount the healthcare group has raked in from the IPO is just over €139 million, short of the total €150 million that was originally placed.

Still, Uniphar and its legacy investors – including some 1,100 pharmacists, management, and the Sisk construction-to-property family that received stock in selling their healthcare unit to Uniphar last year – were lucky to get the flotation away at all.

With the financial market Cassandras now out in force, a group of Irish IPO prospects that postponed deals last year may end up missing the boat again this year.

These include property and hospitality company Tetrarch; a homebuilder called DRes, promoted by US private equity firm Lone Star and Durkan Residential managing director Patrick Durkan; and a retail real-estate investment trust being set up by Californian investment firm Oaktree and Dublin-based Sigma Retail Partners.

Nervous times.

Goodman makes €4m profit on Green Reit bet

Meat mogul Larry Goodman, who stands alone among three Irish billionaire investors in Independent News & Media (INM) to make a gain from its sale to Belgo-Dutch publisher Mediahuis, has managed to scrape out an even bigger profit climbing aboard another company as it prepares to wave goodbye to the stock market.

The octogenarian spent about €2.31 million in INM shares in May last year and made an €800,000 – or 35 per cent – gain as the Mediahuis completed its purchase of the newspaper group last month.

Meanwhile, Goodman used the same family investment vehicle, Vevan, to spend about €63 million on commercial property group Green Reit’s stock in the past two months.

Seasoned market observers questioned the logic of the businessman spending up to €1.82 per Green Reit share – within a whisker of the €1.83 net value per share that the property group had put on its assets as of December.

But news on Wednesday that UK investment firm Henderson Park has agreed to pay €1.9135 per share for Green Reit – valuing the group at €1.34 billion – will deliver about €4 million profit for Goodman. The return would be amplified if the businessman used leverage to build up his stake.

Meanwhile, Green Reit’s sale above its net asset value has triggered fresh interest in recent days in Hibernia Reit, which is trading at about a 20 per cent discount to its net asset value.

"The Green Reit deal shows that there are still people out there who feel there's more to go in the Irish market," said Colm Lauder, an analyst with Goodbody Stockbrokers. "So we've seen quite a degree of rotation of investors out of Green Reit and into Hibernia Reit, and that will likely increase once the Green Reit transaction concludes."

“Hibernia Reit remains mispriced,” he said.

Might Goodman be tempted?